Garnet Capital Advisors Blog

A new political ad harking back to Apple's iconic "1984" campaign depicts the Consumer Financial Protection Bureau as a Stalinist behemoth bent on denying loans to worthy Americans.

American Action Network pays $500,000 for ad run
The ad debuted at the fourth debate between Republicans seeking their party's presidential nomination. The November debate was sponsored by Fox Business and The Wall Street Journal. A group called the American Action Network paid $500,000 to run the 30-second spot seven times during the debate, plus the week after the debate on cable in the Washington, D.C.-area and online, according to Politico.

'Designed to interfere with your personal financial decisions'
The visually striking message shows a line of ordinary Americans filing up to a desk to learn the fate of their loan applications. Behind that desk are ranks of other desks in a gray, Communist-style room dominated by banners of Richard Cordray, director of the CFPB and Sen. Elizabeth Warren, D-Massachusetts, whose brainchild the agency is. Here's a link to the ad on YouTube.

Called "Denied," the spot shows people being given papers that indicate their loan applications have been rejected.

Workers mechanically stamp "denied" on applications as an announcer intones, "They call it CFPB, Washington's latest regulatory agency, designed to interfere with your personal financial decisions." The ad ends with a call to "tell Congress to stop the CFPB."

Weak evidence for claim CFPB is causing more loans to be denied
Bankers, who as a profession are heavily subject to the actions of the CFPB, evidently wanted to learn more about the splash made by the ad. An American Banker story about "Denied" is among that publication's most-read articles of November.

The banking publication examined the claims made in the ad that the agency will deny loans and found no evidence to support the contention. While it's true that many people in the financial sector say the new regulatory environment hamstrings loan-making, statistics show consumer credit grew at an annualized 10 percent rate, up from a 5.6 percent rise in August. That's according to the latest numbers from the Federal Reserve. American Banker notes that consumer credit fell in the year the Dodd-Frank Act was signed (2010) but has grown each following year.

Senator targeted in ad fires back
Here's how Warren, who proposed an agency like the CFPB when she was a law professor, reacted to the ad on Twitter:

"So... Can we talk about that ad that just ran during the #GOPDebate where I look like a Commie dictator?" she or her staff tweeted initially, followed by, "Thousands of dollars on a TV ad is nothing compared to the money the big banks save if their GOP buddies go after the @CFPB. #GOPDebate."

Director or commission?
Indeed, there is legislation pending that would alter the CFPB's leadership structure to that of a bi-partisan commission. The bureau is now led by a single, powerful director. Debate over the change splits mostly along party lines, though recently some Democrats have come to embrace the idea of a commission. While defenders of the status quo say the move is simply to de-fang the agency, proponents of a commission structure point out that the original plan was for just such leadership. Further, these critics say, a commission would diminish partisanship. The next president, who may well be a Republican, could appoint someone to undo much of the work done so far by Cordray, who was appointed by President Barack Obama.

While election-season ads may be entertaining, issues of how banks are regulated are quite serious. The knowledgeable team at loan sale advisory firm Garnet Capital Advisors has deep experience helping banks navigate the always-changing regulatory environment as it relates to loan sales.